Buy to Let Mortgage Deposits

LTV, deposits and rental cover calculations
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How much deposit do you need for a buy to let mortgage?

The amount you can borrow on a Buy to Let mortgage is based on the monthly rent.

Most buy to let lenders will require you to put down 25% as a minimum deposit. This is 25% of the property purchase price or valuation. Some lenders may require a deposit as large as 40%.

It is possible to get a buy to let mortgage with a deposit of just 15%. However, the interest rates are higher and there’s fewer lenders and mortgage deals to choose from.

With a 25% deposit you will have a decent choice of lenders and mortgage deals for your investment property.

For a buy to let remortgage this means you need equity of 25-40% of the property value.

Most buy to let lenders prefer you to own a property already, have earned income over £25,000 and have a good credit score.

So how much could you borrow?

The amount you can borrow with a buy to let mortgage is very different to a standard residential mortgage. While the lenders are interested in your own earnings, they are much more interested in the earnings (ie the rent) that your property can generate.

As with any other mortgage, your deposit will affect how much you can borrow, as this will affect the loan to value %.

If you want to borrow £150,000 against a buy to let property valued at £200,000, this equates to a LTV of 75%.

In addition to the LTV ratio, most lenders will also set a minimum ‘rental cover calculation’ which is generally set at 125% (or 145%) of the monthly mortgage interest payments.

So for a mortgage repayment of £1000 you will need to demonstrate rental income of at least £1250 per month.

Why use Drake?

  • We have been brokers, advisers and property owners since mainstream buy to let arrived in the UK
  • As property investors and landlords ourselves we know the upsides and downsides to owning and renting property
  • We are independent mortgage advisors, giving you maximum choice from both the high street lenders and specialist lenders
  • We work for you so our advisors will do all they can to ensure a successful outcome
  • We like problems!  If your situation is a little tricky or not quite ‘the norm’, this is fine by us. We will try to help and provide strategies
contact us

Speak to an expert about buy-to-let mortgages

The right advice is crucial when starting or expanding your property portfolio. With over 20 years advising on buy to let mortgages we are well placed to assist all landlords.

Call 020 8301 7930 to start your journey with us.